A Close Look at
Subchapter S Corporations
Presented by:
Bill Parrish
(oneplusone)3
Those Pesky Disclaimers
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This Information is copyright protected by
(oneplusone)3 and may not be reproduced or
otherwise distributed without the written consent of
(oneplusone)3
This presentation is for informational purposes only
and should only be implemented by a practitioner
after appropriate due diligence has been performed
Not all of the concepts and strategies proposed in
this presentation may be appropriate for all practices.
Careful study must be undertaken by anyone
considering the implementation of these concepts
and special attention should be given to individual
state laws governing the practice of professionals.
Most Popular Business
Entity
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LLCs Are Not Overtaking
Blend of Features of Partnership and C
Corps
Restricted Ownership Rules
Election Requirements
Compensation Issues
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Reasonable Compensation
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- Too Little
- Family Income Shifting
Excessive Compensation
Constructive Distributions
Government Compliance Initiatives
Shareholder Benefit Issues
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2% Shareholder Status - Medical
Benefits
- Health & Accident Insurance
Premiums
- Health Savings Accounts
Payroll Taxes on Benefits to
Shareholders
Office in Home
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Different Than Sole Proprietorship
Treated as Itemized Deduction
Subject to 2% AGI Limit
Circumstances Must be Factual
Distributions
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Earnings & Profits Account (E&P)
Accumulated Earnings & Profits Account
(AEP)
Accumulated Adjustments Account
(AAA)
Distributions With No AEP
Distributions With AEP
Other Schedule M2 Accounts
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Undistributed Taxable Income
Previously Taxed (PTI)
- Earnings as S Corp between 1958 &
1982
Other Adjustments Account (OAA)
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- Catch All Account
Ordering of Distributions
(Layers of a Sandwich)
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All S Corps to the Extent of AAA
To Shareholders with pre-1983 PTI
S Corporations with AEP
All Other Distributions
Basis Issues
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Inside Basis
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- Usually Tracked at the Corp Level
- Equity Basis
- Loan Basis
Outside Basis
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- Usually Tracked at the Shareholder Level
- Stock Basis
- Other Basis
S Corporation Pitfalls
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Disproportionate Distributions
Distributions in Excess of Basis
Limits on Benefits to 2% Shareholders
Limitations on Pass Through of Losses
Separately Stated Items
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Interest Income
Dividend Income
Capital Gains
Charitable Contributions
Section 179 Depreciation
Certain Losses
Advantages of
S Corporation Status
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Avoid Double Taxation on Profits
Allows Limited Pass Through of Losses
Provides Planning Opportunities
Want to Participate in a
Discussion Blog on S
Corporations?
You are invited to become part of a discussion blog on S
Corporations at www.oneplusone3.com. Just go there, click
on “join” from the home page, and when you are given
Subscription Type, enter “WEBINAR” as your code and you
will be given a free affiliation through May 31, 2009. Once
signed up, you will be contacted with specific information
about the S Corporation Blog.
For Information
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About ConnectEd:
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Jodi Goldberg, Director of Member Services
National Society of Accountants
800-966-6679 Ext 1304
jgoldberg@nsacct.org
About the Presentation
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Bill Parrish, Founder & CEO
(oneplusone)3
800-867-0065 Ext 1013
billparrish@oneplusone3.com
www.oneplusone3.com
C P E Credit
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Jodi Goldberg with NSA has sent you an
email with the qualifying questions for
today’s webinar. Complete that
questionnaire and submit to NSA. They
will then provide you with the CPE
credit certificate.